Monitor tightens efficiency targets for acute trust

The foundation trust regulator has put the “downside case” savings requirements for the acute sector at 5.25 per cent for the financial year that has just begun, rising to 5.5 per cent for the two following years.

This is significantly worse than last year’s predictions for the same period, when the assessment across the foundation trust sector for the same period averaged 4.5 per cent.

A letter from Monitor chairman and interim chief executive David Bennett to trust chief executives said: “We recognise the scale of the productivity challenge that these revised financial assumptions imply. Cost improvement plans will have to be delivered on an even more ambitious scale going forward.”

Monitor calculates the percentages based on the savings trusts would have to make to cope with “likely pay and non-pay pressures in the NHS, including the latest economic forecasts published by the Office of Budget Responsibility, historic trends in NHS pay and prices, and stated government policy on public sector pay”.

The figures are the “downside case” that Monitor calculates alongside a less pessimistic “assessor case”. However, the regulator must be satisfied aspirant foundation trusts’ finances can cope with the downside scenario before they are authorised.

In the letter Monitor said it was changing the way it assessed the pressures on hospitals from readmission and emergency attendance penalties, and below-tariff pricing.

Last year’s downside assessment of these pressures on hospital trusts were an additional 1.6, 1.9 and 2.1 per cent in 2012-13, 2013-14 and 2014-15 respectively.

Monitor’s latest assessment said “for the acute sector as a whole [these factors] could increase the overall efficiency challenge by two per cent”.

The letter added that Monitor will now consider evidence on a trust-by-trust basis for what figure these additional requirements should be set at.

The Foundation Trust Network warned that the assessment would have “knock-on effects” on trusts’ ability to borrow and to ensure patient care does not deteriorate.

Chief executive Sue Slipman said: “It will be no surprise to our members that the tough times are likely to persist and they will have to face making efficiencies year after year while maintaining their high standards.

“NHS savings are supposed to flow back into patient care but there is still little evidence of where these funds are going. Providers have managed to make extraordinary savings but more and more of the risks in the system are being shifted onto them, while we should be looking at whole-system solutions.”